The Tel-Tech 15 Index of top technology issues dropped 1.78% to 183.97.

And the Real Estate 15 Index edged 0.14% higher to 255.10.

The most-active issue was Israel Chemicals, the producer of fertilizer and chemicals derived from the Dead Sea, trading up 0.2%. Parent holding company Israel Corp. fell 2.3%, while Makhteshim-Agan, the agrichemicals specialist, eased 0.5%

The banks were lower, with Discount down 1.2%, Leumi down 3%, Mizrahi Tefahot
UMZRF
off 1.4%, and Hapoalim
BKHYY, -0.20%
shedding 3.2%.

Koor and Carrefour

Koor Industries
KOORF
fell 1.4%. The holding company said in a statement to the Tel Aviv Stock Exchange that the board approved an investment of 3.5 billion shekels, about $886 million, in the shares of Carrefour, the French supermarket chain.

Koor has already acquired 1.76 million, or 0.25%, of Carrefour
CRERY
(CA) at a cost of 284 million shekels. That indicates a per-share price of 161.4 shekels, or about $40.83.

Koor decided to invest given conditions in international markets and the resulting opportunities, and taking into account the company's strong liquidity, the statement said. The plan is in line with the company's strategy of identifying and exploiting opportunities to invest through a focus on global companies and after extended research, Koor said.

The holding company's high-profile investment in the Swiss financial-services provider Credit Suisse generated hundreds of millions of shekels in capital gains. And Koor's chairman and chief executive, Nochi Dankner, told Reuters that Koor plans to rebuild its holding in Credit Suisse. The Israeli daily Globes said Koor still holds 0.7% of the Swiss company.

The investment and license, which gives Teva the exclusive right to commercialize the product worldwide, are valued at $13.5 million, Andromeda said in a statement on Monday.

Andromeda, held 97% by Tel Aviv Stock Exchange-traded Clal Biotechnology Industries and 3% by Teva, is the Yavne, Israel, biotech company focused on treatments for autoimmune diabetes.

Clal Biotech shares rose 4.4%.

Real estate was buoyed by shares of Jerusalem Economic, up 6.2%, British Israel, up 1.3%, and Alony Hetz, up 1.8%. Africa-Israel Investments
AFIVY
fell 1.8% and Elbit Imaging,
EMITF, +0.00%
which also has medical-equipment interests, fell 1.6%.

Nova Measuring Instruments Ltd.
NVMI, -0.29%
leaped more than 60%. The company said in a statement that it expects its best quarter ever when it reports second-quarter results. Nova, which produces measuring equipment for the semiconductor industry, cited strong orders, which it expects to deliver in the second and third quarters.

Rates steady

In a statement, Israel's central bank said that leaving the interest rate at its current low level of 0.5%, along with the bank's efforts to weaken the shekel by buying foreign currency and further keep interest rates low by buying government bonds, "will help strengthen the economy's ability to cope with the effects of the global economic crisis."

Inflation is within the Bank of Israel's target range of 1% to 3% and forecasts indicate that it will stay within the range in the coming year, the central bank said.

"[Changes] in tax rates and in government-supervised prices in the next two months are expected to have a one-off effect" of increasing inflation to close to the upper limit of the target range, the Bank of Israel said. Thereafter, forecasts indicate that "inflation will move closer to the midpoint of the range."

In addition, while the weakness in gross domestic product "is starting to moderate," economic activity "is expected to contract further in the next few months," and unemployment will rise, the central bank said.

"The continued expansionary monetary policy supports the return of the economy to positive growth."

Deutsche on MSCI upgrade

And as a postscript to MSCI Barra's recent upgrade of Israel to develop-market status from emerging market, Deutsche Bank analysts took an approach that differs strongly from the consensus.

Most analysts assessed that the country would suffer because its companies would account for a much smaller proportion of developed-market portfolios rather than a larger proportion of an average emerging-market portfolio.

But Deutsche Bank analysts Dan Harverd and Richard Gussow said Israel's new status reflects "the substantial progress in the Israeli economy since the hyperinflation days of the early 1980s.

"Israel has been a misfit in the emerging-markets context for a number of years due to high gross domestic product per capita, low natural-resource dependency, and a lower growth profile. The high percentage of emerging-funds that are underweight Israel reflects this reality."

The analysts said that contrary to the consensus, Israeli banks and telecom companies should benefit from the upgrade. "They will now be compared to peers from small developed European countries. This is a more relevant peer group from a growth, risk and return perspective," they said.

"In the long-term, Israeli stocks may benefit from the higher multiples prevalent in developed markets (reflecting a lower risk premium), though geopolitical stability is clearly a factor, too," the analysts wrote.

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